Gov. Rick Snyder says controversial NERD Fund will be shut down

Oct. 21, 2013

Gov. Rick Snyder said Monday that his nonprofit foundation, the New Energy to Reinvent and Diversify Fund, complied with all laws, 'but it was becoming a distraction.' / Jarrad Henderson/Detroit Free Press

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Detroit Free Press Lansing Bureau

LANSING — Gov. Rick Snyder announced Monday he will close his NERD Fund, but controversy continued over his refusal to identify who gave more than $1.6 million to the nonprofit he formed after taking office in 2011.

And the identity of the donors and other disclosure issues could continue to dog Snyder in the coming days and weeks.

Today, attorneys for Snyder will attempt to intervene in a Michigan Freedom of Information Act court case in an effort to keep secret the names of more than 20 candidates who sought the Detroit emergency manager position that eventually went to Kevyn Orr.

And after answering “I don’t recall,” or “Not that I recall,” more than 50 times during a three-hour deposition Oct. 9 in the Detroit bankruptcy case, Snyder might be called as a witness in an upcoming trial in U.S. Bankruptcy Court over whether Detroit was eligible to file for Chapter 9 — a rarity for a sitting governor to testify under oath.

Snyder said Monday during an economic development announcement in Owosso, near Lansing, that his nonprofit foundation, the New Energy to Reinvent and Diversify Fund, complied with all laws, “but it was becoming a distraction.”

“I think it is appropriate to say, ‘Let’s wind it down and go forward in a fund where all the donors will be disclosed and the information will be online,’ ” Snyder told reporters.

John Chamberlin, a professor at the Gerald R. Ford School of Public Policy at the University of Michigan who specializes in government ethics, said the fund was a bad idea from the beginning and Snyder’s announcement is “a major step in the right direction.”

Sara Wurfel, Snyder’s spokeswoman, said the identify of donors who gave to the NERD Fund will remain secret because those donors gave with the understanding their donations would be anonymous. She said fund-raising for the NERD Fund will stop and money that is now in the fund will be spent on items such as technology, events and staff travel and meals.

Attorney Alan Wilk issued a statement Monday on behalf of the NERD Fund’s board of directors, saying they are “proud that this fund has been administered in full compliance with state and federal laws,” but “the governor’s work to reinvent Michigan is too vital to be sidetracked.”

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Chamberlin, who is on the board of the Michigan Campaign Finance Network watchdog group, said he would prefer if Snyder disclosed the donors’ names, but “I guess I can live with it, given that he seems to have learned a lesson from this.”

The fund has been controversial because it can accept unlimited corporate donations from anonymous donors. It has been used to offset housing and travel expenses for Detroit emergency manager Kevyn Orr. It also was paying $100,000 a year to Snyder aide Richard Baird, who was a contractor until the governor’s office said last week that Baird was joining the payroll as an appointee. Baird will hold the title of transformation manager, with a $140,000 salary.

Snyder said the fund was intended to lessen the financial burdens of government for taxpayers, but critics said it kept the public from knowing what special interests are giving Snyder financial support.

News of the fund’s closure did not satisfy Snyder’s critics.

“Closing the NERD Fund without full disclosure of past donors only begs the question: What is Gov. Snyder hiding?” said Karla Swift, president of the Michigan state AFL-CIO.

Lon Johnson, chairman of the Michigan Democratic Party, called on Snyder to “keep his promises of transparency” and immediately disclose the fund’s donors.

Snyder, testifying under oath in the Detroit bankruptcy case, said he doesn’t know who donates to the fund.

The fund raised about $368,000 in 2012, down from about $1.3 million in 2011, according to reports filed with the Internal Revenue Service.

Also on Monday, attorneys for the UAW said they have subpoenaed Snyder to testify at the trial over Detroit’s bankruptcy eligibility, which is expected to start Wednesday. U.S. Bankruptcy Judge Steven Rhodes has not yet ruled on whether the governor will be required to testify, but he appeared unsympathetic to a request from a government lawyer that Snyder be excluded.

Today, lawyers for the governor will seek to intervene in a Michigan Freedom of Information Act case in Wayne County Circuit Court in which a nonprofit group headed by Highland Park activist Robert Davis is seeking the names of the more than 20 unsuccessful candidates for the Detroit emergency manager job.

Attorneys for Davis said records containing the names are clearly subject to FOIA and must be turned over.

Attorneys for the governor say the Davis FOIA request is “an improper attempt to avoid the legal exemption from FOIA provided to the governor and his executive office,” and it should be denied.

Chamberlin said that all the discussions leading up to Orr’s appointment should not have to be made public, but he sees no problem with the governor testifying in a court case. He said he also sees no reason why the names of the other emergency manager candidates should not be disclosed.

As for the fund that will replace the NERD Fund, Wurfel said its purpose will be “continued reinvention efforts, saving taxpayer dollars, and helping ensure responsive, accessible government.” Its donors will be disclosed online quarterly, she said.

The NERD Fund cannot be officially closed until after its required IRS report for the 2013 calendar year is filed, Wurfel said.